The Michigan Retail Index’s May survey found that 61 percent of respondents reported sales increases over April; 27 percent recorded declines and 12 percent reported no change. The results create a seasonally adjusted performance index of 61.4, well above the 43.7 performance index reported in April. A year ago, the Retail Index was 71.6.

“It looks like we’ll have a strong summer of sales,” said James P. Hallan, President and CEO of Michigan Retailers. “April was a sluggish month, so it’s good to see the Retail Index and the unemployment rate head in the right direction. Clearly retail sales are being impacted by the fluctuating weather that Michigan has experienced.”

The Retail Index shows that 58 percent of Michigan retailers expect strong sales through August, while 12 percent predict a decrease and 30 percent expect no change. That results in an adjusted outlook index to 69.2 – a good sign for a strong summer, according to the Retail Index survey.

The unemployment rate dropped a tenth of a percentage point from April to 4.6 percent.

Consumers are confident, according to a Michigan State University State of the State Survey released earlier this month. More than half – 60.9 percent – of participants rated their financial circumstances good or excellent.

“Michigan’s consumer confidence so far this year is just behind the all-time highs set in the late 1990s and early 2000s,” said MSU economist Charles Ballard. “It’s not 1999. It’s not gangbusters, but it’s pretty good. It’s still an optimistic outlook.”

Nationally, the retail industry employment increased by 28,800 jobs seasonally adjusted in May over April and 100,200 jobs unadjusted year-over-year (excluding auto dealers, gas stations and restaurants), according to the National Retail Federation (NRF). In addition, May retail sales increased nationally by 0.7 percent seasonally adjusted over April and 5.6 percent unadjusted year-over-year, NRF said.

Those seeing strongest growth were general merchandise stores, clothing and clothing accessory stores and building and garden supplies.

Note: William Strauss, senior economist and economic advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.

Outlook for the next three monthsRetailers expecting increased, decreased or unchanged sales, inventory, prices, promotions and hiring compared to last month (numbers in parentheses indicate April results)

% Increased

% Decreased

% No Change

Index*

Sales

58 (75)

12 (6)

30 (19)

69.2 (76.5)

Inventory

38 (41)

17 (17)

45 (42)

58.7 (55.5)

Prices

25 (27)

4 (3)

71 (70)

60.2 (61.4)

Promotions

33 (45)

1 (5)

66 (50)

67.1 (70.0)

Hiring

17 (40)

5 (5)

78 (55)

54.5 (60.8)

May sales performance and outlook for the next three months, by region (The first number indicates sales performance for the month; the number in parentheses indicates outlook for the next three months)

% Increased

% Decreased

% No Change

North

54 (73)

31 (27)

15 (0)

West

60 (57)

27 (7)

13 (36)

Central

90 (70)

0 (0)

10 (30)

East

20 (40)

60 (40)

20 (20)

Southeast

63 (42)

26 (5)

11 (53)

*Seasonally adjusted diffusion index. A diffusion index, which is the sum of the percent of respondents indicating increase and half the percent indicating no change, is calculated and then seasonally adjusted using the U.S. Census Bureau’s X-11 Seasonal Adjustment procedure. Index values above 50 generally indicate an increase in activity, while values below 50 indicate a decrease.